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Private sector general insurer SBI General Insurance was able to control losses in its third year of operations, and has 208% premium growth for the financial year 2012-13. In the first media interaction after taking over the top positions, Bhaskar J Sarma, MD & CEO, SBI General Insurance and Steve Hollow, Deputy CEO, SBI General, talk to M Saraswathy about the company's growth strategies. Excerpts:
Your largest segment in terms of premium is fire insurance. Did you take a conscious decision to have a higher exposure in this segment?
Bhaskar Sarma: It was not really a strategic decision. When the company started, we had these products. A significant part of the fire portfolio is long term home policy. State Bank of India (SBI) being one of the largest players in home loan, it was a natural fit that happened. This is also a portfolio which is extremely profitable.
You are already present in areas like health, motor and corporate segment, among others. What are the newer segments that the company will enter?
Sarma: Health is one area, where we already have an individual health plan. Now we have launched the family floater. Secondly, we are also in dialogue with SBI and are in the process of designing a health product for the customers of the bank. We should be able to launch it in about a month or so. What we are designing for the State Bank of India is within the approved parameters of our health insurance product.
Steve Hollow: We are also entering the niche segments like travel insurance. We are about to file the travel insurance product very soon.
The personal accident (PA) cover that you have been offering to SBI account holders has bought huge volumes. Any plans to design more such special covers for SBI account holders?
Sarma: We have got about Rs 98 crore premiums from the PA cover. This is one distribution channel which we would like to leverage on. The network of SBI and the market within SBI of its account holders is huge. The products that we trying to sell through SBI simple, easy to understand and scope of misselling is extremely limited. It is a transaction which can be completed very quickly.
Hollow: Two wheeler is another product, which we are trying to build.
You have a large exposure to retail segment. Will the company look to a build a larger portfolio in the corporate segment, this fiscal?
Sarma: We have 65% of the business coming from retail segment and the small and medium enterprises (SME)-corporate segment taking up 35%. SME is a segment which is performing very well and we would like to continue with it. But, retail portfolio including home, auto and health will also grow.
SBI General's net loss has stood at Rs 145 crore, against the budgeted Rs 165 crore. What are the factors that have brought down the loss?
Sarma: Our budgeted loss was of Rs 165 crore and net loss was Rs 145 crore. The low distribution cost has played a part. There are certain other areas for which we had budgeted, but we have not spent.
Hollow: Our loss ratios are better than expected. Further, on a product-by-product basis too, we spent lower than budgeted. Our loss ratios are performing better than expected.
Since you already have a large bank partner, would you be looking to tie-up with additional partners?
Sarma: We have SBI and its 5 associate banks as partners. Plus, we also have a regional rural bank (RRB) sponsored by SBI. We are looking to tie-up with many more RRBs and other banks going forward.
Apart from bancassurance, what are the newer areas that you are planning to expand into?
Sarma: Our motor product is online and now we are in the process of putting our health offering online. Further, we also have simple products like loan insurance available online. We are targeting to set up 66 branches, by the end of this fiscal. We are also examining the prospects of setting up micro branches.
Hollow: Penetration online in India is quite small, as compared to other nations. We are developing our portals to have motor-end to end process. As we develop products, we will also look to develop the end-to-end processes, so that people choose to transact online. Further, we also have option of putting our people in SBI branches so that we can representations in vast locations. We already have satellite presence in 120 plus locations.
Could you give us an idea of the capital infusion plan for the company? When do you plan to break-even?
Sarma: We are working on the capital infusion plans. It will be in the range of Rs 150-250 crore in this fiscal. Next fiscal too, we will require some capital, which will be taken care of, by the shareholders. Given our growth path, we anticipate that by March 2015, we should be able to break-even.
